For the purpose of the embodiments of the present invention, a general term “beneficial person” may be defined as an individual, company, or any other body of persons. A company may be defined as any corporate body or entity, which is treated as a corporate body for tax purposes. Furthermore, for the purpose of the embodiments of the present invention, a general beneficial person may be categorized into two groups—an initial beneficial person and a current beneficial person:                Initial beneficial person—An initial beneficial person is defined as an entity (may be an individual, company, or any other body of persons) who received dividend and interest income paid on cross border investments; and is subject to a non-resident withholding tax in the sourced country of income. As a result of a double taxation treaty between an initial beneficial person's country of residence and a source income government, an initial beneficial person may qualify for a tax treaty benefit. The tax treaty benefit may reduce the source income withholding tax through relief at source or tax reclamation provisions.        Current beneficial person—A current beneficial person is defined as an entity (may be an individual, company, or any other body of persons), including a special purpose vehicle (SPV), who is legally assigned ownership of tax reclaim assets upon entering into a private purchase and sale agreement of the tax reclaim assets with an initial beneficial person.        
Cross-border investments are commonplace in the business world. For example, a U.S. based company may have equity interests in suppliers, distributors and partially-owned subsidiaries in several other countries. The same is true for companies based outside the U.S.A. Further, mutual funds and institutional investors frequently invest in entities in other countries. Frequently, such a company or, more generically, an initial beneficial person who receives dividend and interest income paid on cross-border investments is subject to a non-resident withholding tax, which may be as high as 25%-35%, for example. A paying agent withholds the non-resident tax amount and pays it to the tax authority. However, an initial beneficial person may qualify for a tax treaty benefit under the provisions of a double taxation treaty between the government where the income arises (i.e., the must cope with source income government) and the initial beneficial person's country of residence.
There are two methods for obtaining the tax treaty benefit—relief at source, which provides tax relief at the time of the dividend and interest payment; or tax reclamation, which requires a documented filing for a refund of the over-withheld taxes.
With increasing cross border share ownership, an initial beneficial person knows the impact of taxation by foreign tax authorities. Relief at the source is the preferred tax reduction method for many initial beneficial persons, because it occurs at the point of dividend and interest payment. On the other hand, in practice, not all countries have “relief at source” tax provisions; and for these countries, the current tax relief infrastructure supports tax reclamation only.
Global custodian banks typically act as agents to file the required legal documents on behalf of their clients, as initial beneficial persons, in order to reclaim the over-withheld taxes from the foreign government tax authorities. The reclamation process is complex and presents market challenges, which stem from legal and administrative issues.
The legal issues primarily relate to the assembling of evidence to prove an initial beneficial person's entitlement to the tax reclamation assets, as defined by the double taxation treaty among the involved governments. As such, if the treaty's requirements are not fully met the treaty benefit may be denied to an initial beneficial person. Subsequently, this may lead to the double taxation of global income. This is of concern for the country of the source income and for an initial beneficial person's country of residence or domicile.
The administrative issues relate to compliance difficulties involved in ensuring that the tax treaty benefit is granted effectively to an initial beneficial person with respect to the country of residence. A source income government's jurisdictional tax law and applicable double taxation treaty dictate the method for the treaty benefit payment—relief at source or tax reclamation. In the absence of relief at source payment, an initial beneficial person obtains the treaty benefit through tax reclamation. One of the compliance and administrative difficulties surrounding tax reclamation is the statute of limitations, which limits the allowable time to file for the treaty benefit. Most typically, the statute of limitations is three years from the dividend and interest pay date. On the other hand, however, double taxation treaty law often does not delineate the time allowed for the foreign government tax authority to pay the treaty benefit to the claimant. As a result, it may take from 6 months to 7 years or more in some jurisdictional markets for an initial beneficial person to receive the treaty benefit from the respective foreign government tax authority.
The tax reclamation process has created several pain points for claimants, including but not limited to:                Zero use of tax reclaim assets and lost time value of money—While tax reclaim assets remain in the treasuries of foreign government tax authorities, global investors are unable to use those tax reclaim assets and their value is not adjusted for the time value of money. Otherwise, these assets could be used by global investors for many purposes, such as to fund current portfolio needs such as funding of pension benefits; reducing administrative costs; and pursuing portfolio reinvestment opportunities in order to keep pace with the rate of inflation.        Expensive tax reclamation and administrative costs—High fees are associated with tax reclamation filings, effectively reducing the value of the tax reclaim assets. Furthermore based on the lengthy tax reclamation period, it can be very expensive for global investors to support the administrative infrastructure necessary to manage the tax reclamation process.        Lengthy tax reclamation periods—Depending on the jurisdictional tax market, it could take anywhere from 6 months to 7 years or more for global investors to collect on their filed tax reclaim assets.        Sub par portfolio performance—Over-taxation of dividend and interest income effectively reduces the overall performance of portfolios as global investors do not receive the intended full benefit of their investments. Eventually when the tax reclaim assets are paid by foreign government tax authorities, the assets' values are greatly reduced as a result of inflation, administrative cuts, etc.        
The time between the filing of a tax reclamation claim and the eventual payment is extremely important from a claimant's perspective. During this time, the dividend and interest tax reclaim asset has zero utility because it is not generating additional income. As recently as February 2006, the Centre for Tax Policy and Administration within the Organisation for Economic Co-Operation and Development (OECD) estimated the value of assets currently managed by investment funds is in excess of US$16 trillion, of which a substantial part of those assets represents cross border investments. According to the Centre for Tax Policy and Administration:                [I]t is therefore often unclear whether the benefits of tax treaties are available to the funds themselves. Where these benefits are not available at the level of the fund, they would normally be available to the [initial beneficial persons] themselves to the extent that these are residents of countries which have a concluded (sic) tax treaty with the country from which the fund derives income.        Organisation for Economic Co-Operation and Development, “Improving Tax Treaty Benefits for Collective Investment Funds”. Organisation for Economic Co-Operation and Development. 21 Dec. 2006. <http://www.oecd.org/documentprint/0,2744,en—2649—33747—3605 1121—1—1—1—1,00.html>        
It is estimated that there are over US$161 billion in global dividend and interest tax reclaim assets outstanding each year. Currently, there are no financial institutions or marketplaces providing liquidity for tax reclaim assets.
A need thus exists for systems and methods serving to reduce or eliminate the market challenges of an initial beneficial person's need to collect global dividend and interest tax reclaim assets.
Some embodiments of the present invention allow countries to retain their current tax relief infrastructure and do not require legislative or administrative changes in order to reform current tax reclamation procedures. ROSESeries ABS may be created through the private purchase and sale of global dividend and interest tax reclaim assets between an SPV and an initial beneficial person, for further sale to an SPV trust in order to constitute a true sale of assets. This affords the assets bankruptcy remote protection from an initial beneficial person's risk. The private purchase and sale of the tax reclaim assets to an SPV may be by assignment in the source income country, which is in accordance with the foreign government tax authority's procedures and market practices. Furthermore, the legal assignment of tax reclaim assets between an initial beneficial person and an SPV for the private purchase and sale (true sale) methodology does not infringe on the double taxation treaties among foreign governments.
The creation of ROSESeries ABS through the global pooling of dividend and interest tax reclaim assets may provide much-needed financial liquidity to an initial beneficial person for reinvestment opportunities and cash utilization, thereby increasing an initial beneficial person's return on investments. The creation of ROSESeries ABS may also contribute to global financial market efficiency and global capital market deepening through ROSESeries ABS' liquidity provisions.
Therefore, ROSESeries ABS may provide much-needed market liquidity and efficiency, thereby enhancing global capital market deepening. For example, if the expansion of money theory is employed, and the Federal Reserve Bank's reserve requirement is set at 10%, the expansion of money multiplier will be 1/10%=10. Using the expansion of money multiplier, a US$161 billion in outstanding global dividend and interest tax reclaim assets could theoretically expand to US$1.61 trillion within a very short period in the absence of leakage. It is very easy to see the liquidity value of ROSESeries ABS to an initial beneficial person and to the global capital market at large.
Asset securitization has produced tremendous financial liquidity for the global market since its inception in the US capital market in 1970. By mid-2004, it was estimated that the total rated global securitization market stood at US$1,240 billion. The first ABS were issued in 1985; and in that year, the market for publicly offered ABS issues was US$1.2 billion. (The Bond Market Association. “Types of Bonds: Asset Backed Securities Contents.” The Bond Market Association. 5 Jan. 2007. http://www.investinginbonds.com/learnmore.asp?catid=5&subcatid=16&id=10.) The Bond Market Association estimates put the 2003 issuance of publicly traded ABS at US$479.4 billion. (The Bond Market Association. “Types of Bonds: Asset Backed Securities Contents.” The Bond Market Association. 5 Jan. 2007.
http://www.investinginbonds.com/learnmore.asp?catid=5&subcatid=16&id=10.) Primarily ABS have been credit card receivables, auto loans, manufactured-housing contracts, and home equity loans. As the ABS market continues to grow and mature, new ABS asset classes are being introduced to the market (e.g. Royalty ABS). ROSESeries ABS represent a new ABS asset class. With the current global market estimate of US$161 billion in outstanding dividend and interest tax reclaim assets annually, ROSESeries ABS may inject much-needed liquidity into the global capital market.